Housing strength takes Adelaide Brighton to revenue record

Rising gas prices are set to add about $3 million to the energy bill of cement and concrete maker
Adelaide Brighton
in the coming year, all but cancelling out the boost delivered to its bottom line by the repeal of the carbon tax.

Chief executive
Martin Brydon
made the comments about increased pressure from rising energy prices as he handed down an interim profit result for the six months to June 30 that missed guidance and ­analyst forecasts.

Net profit after tax for the six months to June 30 dropped 15.9 per cent to $51.2 million. This was despite a lift in both revenue and statutory earnings.

A number of one-off restructuring and transaction costs contributed to the decline, but the company said these costs – associated with ­restructuring parts of its cement operations and ­corporate functions – were expected to contribute to savings in the future.

Mr Brydon said $112 million had been invested in improving efficiency and environmental performance in the cement and lime business.

Pre-tax cost savings of around $8 million are expected in the current calendar year, followed by pre-tax cost savings of around $11 million in calendar year 2015.

The company said it expects one-off significant items for the full year to total $18 million before tax.

The company is streamlining its Australian cement making operations with a plan to run fewer plants, but achieve better efficiency by keeping them running at full capacity. Any shortfall in supply stock will be made up with imports. Mr Brydon said converting more of its main cement plants, to more energy-efficient fuels was a top priority as the company continues to squeeze out more costs.

Goldman Sachs analysts
Matthew McNee
and
Ramanan Sooriyakumar
had predicted the company would lift the interim dividend to 7.8¢, up from 7.5¢ in the previous corresponding period.

“Adelaide Brighton expects 2014 full year underlying net profit after tax will be in the range of $153 million to $163 million and anticipate that the total 2014 ordinary dividend will be maintained at 16.5¢ fully franked," ­Mr Brydon said.

Three acquisitions at a cost of $174 million were announced on August 6, and will help the company expand in SA and Queensland.

‘While the company is yet to take control of any of these assets, the friendly nature of the takeovers means we have good visibility, co-operation, and the planning is well underway," Mr Brydon said.

The chief executive said the company would continue to look for more takeover targets, while also looking at making further land sales that will assist cashflow.